The City of Vancouver has traditionally outpaced the rest of Metro Vancouver when it comes to the creation of new purpose-built rental housing, but that no longer is the case.
A new rental market update by the Goodman Report (GR) indicates the number of proposed rental housing units in Vancouver actually fell by 36% over the last two years from 3,371 units in 2017 to 2,150 units in 2019.
In contrast, the region’s suburban municipalities have seen their proposed rental units skyrocket during the same timeframe — from 2,618 units in 2017 to 6,999 units in 2019.
Vancouver’s downward trend is happening despite its recently enacted policies that are meant to encourage developers to construct new rental units, including the Moderate Income Rental Housing Pilot Program and the Rental 100 Secured Market Rental Housing Policy.
According to GR analysts, developers are turning to suburban municipalities to build rental housing as they are offering very simple incentives. The City of Coquitlam and the City of North Vancouver, for instance, are providing an extra floor space ratio density of 1.0 times the size of the lot.
“On the other, the City of Vancouver’s rezoning process is so convoluted and risky, builders of rental are moving elsewhere,” reads the market update.
“In the last two years, the City of Vancouver has gone from the new rental supply sweetheart, with its self-congratulatory missives outlining the success of its programs, to being absolutely outpaced by the suburban market.”
Based on data from Canada Mortgage and Housing Corporation (CMHC), Vancouver saw its first major new gains in rental housing from 2010 and 2018, when 3,023 units were created — far more than the suburbs. But in 2018, within Vancouver proper, only 12 projects containing 1,364 new rental units were completed.
With a narrowing vacancy rate and a housing affordability crisis that had clearly expanded beyond the borders of Vancouver, other municipalities adopted their own incentives in an attempt to persuade developers to build rental units instead of condominiums that are generally more profitable and provide a quick return.
CMHC’s data notes that Vancouver’s total purpose-built rental stock only grew by 3,960 additional units over a three-decade period — from 54,170 units in 1990 to 58,130 units today. Over this same period, the city’s population grew from about 460,000 people to approximately 650,000 people.
The rental vacancy rate in Vancouver is currently hovering at less than 1%, providing households depending on rental housing with extremely few housing options. According to the city, a healthy vacancy rate ranges between 3% and 4%.
The municipal government is anticipated to provide an update on its housing strategies later this year.